Impressive. I can hear the people “I told you, there is no crisis, the growth is strong”.

Well… sure… But we need to go deeper.

-INVENTORIES
Bingo. Big jump at 51 billions THB… It contributed for 2,6 points to the growth of GDP. Net exports are decreasing a lot.

-DEFLATOR
The best part. We have 2 ways to calculate GDP : current prices (nominal) and constant prices (real). We use of course real GDP to calculate growth year-on-year.
How do we calculate real GDP ? By removing inflation. What is “inflation” ? A price index (for consumers, we have the Consumer Price Index) and a base year (in Thailand, the base year is 1988).

On Q1, the deflator was 4 % ( 5 % for Q4 2007).

Usually, deflator and CPI evolve in parallel. Here is a chart.

The divergence is obvious on Q1. The low deflator is a statistical glitch… On Q2, it will be higher. It’s a certainty.

And the rule is very simple : the higher the deflator is… the lower the real GDP is, and the lower is the growth year-on-year.

A low deflator boosts GDP figures.

I should add that the net exports component (exports-imports) is going to be crushed on Q2 because… yes you’ve guessed : trade deficit due to oil. Therefore, its contribution to growth will be lower, lower than the 0,6 point on Q1.

What do we have left ? Government expenditures. It will go probably up, but not enough to compensate. Then, Private consumption and Gross Fixed Capital… both are going to be crusched too by the crisis (the first effects should be seen on Q2, and the decrease will accelerate on Q3 and Q4).

Its’s logic : growth of GDP on Q2 will be lower than 6 %. And Q3 and Q4 even worse.